World Bulletin/News Desk
A proposed corporate tax break on profits derived from research and development done in the United States is winning some bipartisan support in Congress, with the promise that it could spur jobs and innovation.
A "patent box" tax break is in the policy mix as lawmakers target full-scale tax reform in 2013. The idea is to give companies a tax break, an d a sizable one, on profits derived from patented products that originated with U.S. research and development.
Several European Union countries have embraced the patent box and the United Kingdom is set to adopt it next year. A bipartisan pair of U.S. lawmakers this week introduced a bill with a 10 percent tax for qualifying income.
The idea has its skeptics, both on its merits and viability. Critics say another tax break for business would lead to a race to the bottom in tax rates and potentially cut revenues. Backers say the global economy requires countries to compete to lure innovation.
"There is a race going on and the idea that we can just pretend we are not going to run the race is not a luxury we have," said Robert Atkinson, president of the Information Technology and Information Foundation, a think tank that gets some corporate funding.
Several experts at a recent meeting in Washington said a U.S. patent box, named for a box printed on tax return forms that companies would check to claim the break, might be too complex to implement.
"The main challenge in designing a patent box regime is to isolate income attributable to patents," said Peter Merrill, an economist at PricewaterhouseCoopers and former chief economist at the congressional Joint Committee on Taxation.
Merrill said the evidence links patent box policies to increased patent activity, but not necessarily to job growth.
In the United States, both Democrats and Republicans widely back a broad revamp of the U.S. tax code, likely including a cut in the corporate tax rate, which is high by global standards.
Movement of American jobs abroad is a hot political issue amid a sluggish economy and a tight presidential race.
President Barack Obama and some fellow Democrats support special tax breaks to encourage companies to move jobs back to the United States, while rival Republican presidential hopeful Mitt Romney says Obama's policies have hurt the economy.
Comprehensive tax reform, last accomplished in 1986 under President Ronald Reagan, is a daunting project expected to take years. Backers are pushing the patent box as a step forward.
"We should start by mixing the old, Americans' might in manufacturing, with the new, America's might in innovation," said Democratic Representative Allyson Schwartz, who has offered a patent box bill with House Republican Charles Boustany.
Any congressional action on the Schwartz-Boustany bill, or a parallel measure in the Senate, is unlikely before 2013.
A patent box proposal is among options in a corporate tax reform blueprint released last year by Republican Representative David Camp, chairman of the tax-writing Ways and Means Committee in the House of Representatives.
"While they haven't endorsed it, they are looking at it as a viable option," said Boustany spokesman Neal Patel.
The U.K.'s new system led drug giant GlaxoSmithKline Plc to promise more jobs in Britain. In March the company, which has cited the country's new patent box as a lure, said it would invest $792 million in a biotech plant there.
His comments came after a joint statement issued in Washington said Beijing had agreed to reduce its trade deficit, "significantly" increasing purchases of American goods.
Euro area goods trade surplus reaches over $60B, EU28 deficit at $7.5B, official figures show
Property sales in April down 9.9 pct year-on-year, according to official data; sales to foreigners surge 25.8 pct
European stock markets meanwhile rose as the euro weakened against the dollar, but Wall Street pulled back in early New York trading.
BIST 100 climbs 0.44 pct; foreign currency exchange rates rise against lira
Banks' total assets reach over $42 billion as of March
Industrial output jumps 9.8 percent in Q1 and 7.6 percent in March year-on-year, official figures show
BIST 100 slightly increases by 0.07 percent; US dollar/Turkish lira exchange rate stands at 4.4680
Emerging market monetary policy could tighten more than expected as global monetary conditions normalize, says ratings agency
Further policy action is needed to more decisively boost domestic investment, which would also support external rebalancing.
Gap stood at $4.8 billion in March with 12-month rolling deficit of $55.4 billion
Automotive exports rise to $11.3 billion in first 4 months of 2018
Finance Minister Naci Agbal says Turkish banks are careful to abide by rules of international institutions
BIST 100 rises 0.09 percent; US dollar/Turkish lira exchange rate stands at 4.2450